Public procurement represents quite a significant share of economic life in Albania, and could be an important tool to help Albanian government achieve social and macroeconomic goals. An effective public procurement system contributes to the proper management of public funds. It can be a strategic mechanism that helps achieve economic and social objectives. This is why the EU puts such great emphasis on the importance of transparent, effective and efficient public procurement in future Member States – Albania is one of them - as part of the process of EU integration.

In the framework of an in-depth reform of the public procurement system in Albania and, concretely, in the framework of measures towards increasing transparency and fighting against corruption, the Public Procurement Agency – in collaboration with the component ‘Reform in Public Procurement’, of the Millennium Challenge Threshold Agreement Programme for Albania, and managed by USAID – has set up an electronic procurement system. Since January 2009 this system enables secure transactions among Albanian public institutions as well as the national and international business community. It offers a secure, efficient and transparent preparation and administration of all tender-related documents, eliminating unnecessary paperwork and providing secure dataflow throughout the entire process. Moreover, all the transactions, starting from the download of documents till the moment of bidding by electronic means, may be done at any time and wherever the economic operators are, with all these transactions being free of charge.

Observed from the perspective of these long term objectives, much progress remains to be made on the current situation in the area of public procurement. Many reports by researchers, the media and the non-governmental sector often emphasise fraud and corruption as the main cause of inherent problems in this area, which result in problems in fulfilling those public sector functions that depend on procurement.

According to Albanian law, the main objectives of public procurement are competitiveness, equal access, non- discrimination and transparency. The aim is to guarantee the optimal delivery of public goods, services and works at the best price and quality. The State Supreme Audit (KLSH) identified a number of challenges concerning the proper functioning of public procurement:

i) Frequent changes in the law on public procurement;

ii) Different interpretations of the law by civil servants;

iii) Procedures are not harmonised within the institutions and/or for similar goods;

iv) Problems in deciding the upper spending limit;

v) Lack of expertise in managing the tendering procedures (high staff turnover, lack of training and experience (e.g. with technical criteria), use of the electronic public procurement system).

Over the period 2010 to 2016 about 30 % of all public procurement procedures in Albania were done using the negotiated procedure. These procedures were used to procure medicine (28%), security items (14%), fuel (12%) and food (10%). These strategic goods required for the basic functioning of the state of Albania amounted to 64% of all negotiated procedures. Hence, the proper use and operation of the negotiated procedure is crucial for the budget of Albania, which is facing high deficits. It is in the interest of the Albanian people to ensure effective and efficient procurement of goods, works and services as this directly impacts on the availability and prices of strategic goods and services such as medicine, food and roads.

The following general problems are most frequently observed in Albanian public procurement systems:

Untimeliness and unpreparedness; these are common weaknesses that relate to general delays in various procurement process steps. They can sometimes jeopardize the functioning of public sector institutions and their ability to complete their tasks, either in the short-term, affecting the delivery of services to the citizens, or in the long-term – such as delays in the completion of capital investments.

The use of direct negotiations procedures; this very often applies in situations where delays occur and authorities are forced to initiate “emergency procedures” in order to keep the work going. Such procedures are characterized by a lack of transparency and are generally less cost-effective and of lower quality;

- Annulment of tenders; this arises when complaints are raised by the bidders who did not win, and the authorities are forced to annul tenders due to procedural errors. This weakness may specifically indicate a lack of transparency in the process and a failure of the system to provide equal opportunities for all potential bidders;

- Cost/quality ratio is not always achieved; this is one typical effect of an inefficient procurement system, and has unwanted consequences on the budgets of institutions that are already struggling to balance the revenue and expenditure sides. In areas involving direct services to citizens – such as healthcare, this can cause failures in meeting citizens’ needs, create long waiting lists, etc.